How do you keep safe if you are overseas but buying land in New Zealand?
Two overseas investors, William Mitchell and Marzio Keiling, faced legal consequences for attempting to circumvent the laws around purchasing forestry land in New Zealand.
The pair used a strategy of incorporating New Zealand Companies where the main shareholder was a New Zealand Citizen. This was done so that the Company could purchase land with the pair behind the scenes funding their respective investments. As these were then “New Zealand Companies” with majority shares held by New Zealanders, they did not apply or obtain consent under the Overseas Investment Act (“the Act”) to purchase.
Mitchell, bought eight forestry blocks, totalling 111 hectares, in the Tairāwhiti/Gisborne area in 2011 through his company, Heidi Mitchell Sustainable Ltd (HMSL). Keiling set up AJN Land Ltd (AJN) in 2014 and purchased a 160.6-hectare forestry block near Auckland. Both properties were classified as “sensitive land,” requiring government approval before purchase, which neither obtained prior to purchase.
Land Information New Zealand (LINZ) took the investors to court, seeking penalties and orders to sell the properties. The court ruled that both companies had breached s42 of the Act, (an overseas person giving effect to an overseas investment without consent under the Act), and Mitchell also admitted to liability under s43 of “knowingly or recklessly enter[ing] into a transaction that defeats, evades or circumvents the operation of the Act.” The Court ordered Mitchell and Keiling to pay penalties totalling over $1.6 million and to divest their remaining properties.
The key point of this is to be careful when buying property in New Zealand. If you are interested in your options and would like to discuss further, please contact our team, or read more here.
Please note that this article is not a substitute for legal advice and you should contact your lawyer about your specific situation. Please feel free to contact us by phone 03 348 8480.
